Today the CFPB announced that they the Attorney Generals in 47 states and the District of Columbia have taken action against J.P. Morgan Chase over so called zombie debts that had been on sold to third party debt collectors. Basically Chase have been caught illegally robo-signing court documents and selling credit card debt that contained accounts that were “inaccurate, settled, discharged in bankruptcy, not owed, or otherwise not collectible”.
Overview
Below is an overview of what J.P Morgan Chase have been ordered to do:
- Chase is ordered to permanently stop all attempts to collect, enforce in court, or sell more than 528,000 consumers’ accounts
- Chase is ordered to document and confirm debts before selling them to debt buyers or filing collections lawsuits
- Chase will pay at least $50 million in consumer refunds
- $136 million in penalties and payments to the CFPB and states
- $30 million penalty to the Office of the Comptroller of the Currency (OCC) in a related action
Receiving Compensation
The $50,000,000 that is earmarked for consumer refunds, will be given out to consumers in the below situation.
Chase will pay cash refunds to consumers against whom collections litigation was pending between January 1, 2009 and June 30, 2014, for amounts paid above what the consumer owed when the debt was referred for litigation, plus 25 percent of the excess amount paid.
Final Thoughts
It’s a shame that giant credit card corporations think that it’s acceptable to automatically file lawsuits for debts that they haven’t properly verified and I’m glad to see that the CFPB and AG offices in various states are dedicated to punishing these practices.
